ASIAN PANEL March 2, 2010

1. ASIAN PANELMarch 2, 2010 INTERTANKO OVERVIEW REPORT JOSEPH ANGELO DEPUTY MANAGING DIRECTOR

2. MEMBERSHIP BUDGET SECRETARIAT COUNCIL ISSUES PIRACY GREENHOUSE GASES EXCOM ISSUES US ISSUES

3. MEMBERSHIP • 270+ Members • 3,100+ Tankers • 250+ Million DWT • Members in 40+ countries • MORE THAN 75% OF THE INDEPENDENT TANKER FLEET • 330+ Associate Members

4. MEMBERSHIP Members/million dwt No. of tankers

5. BUDGET 2008 2009 2010 (BUDGET) Total Operating Income (US$) 8,689,980 8,603,025 7,291,509 Total Operating Expenses (US$) 8,473,822 6,511,325 6,767,825 Operating Result 216,158 2,091,700 523,684 Non-operating Income/expenses -291,883 270,000 -25,000 Result for the Year -75,725 2,361,700 498,684

6. BUDGET • Reasons for large operating surplus for 2009 year end - Virtual retention of all members in 2009 - Disciplined control of discretionary expenditures (limiting of activities) - Expenditures benefiting from strong US dollar against British pound and Norwegian Kroner • Membership fees for Members and Associate Members in 2010 to be reduced by 10%.

7. SECRETARIAT • 24 STAFF MEMBERS IN 4 OFFICES Oslo (12), London (10), Singapore (1) USA (1) + Brussels, Manila (consultant) • STAFF INCLUDES - Managing Director - Technical Director - Director, Regulatory Affairs - Marine and Chemical Director - General Counsel

8. COUNCIL ISSUES NEW LEADERSHIP ORGANIZATION REVIEW TANKER MARKET CRIMINALIZATION OF SEAFARERS FACILITATION PAYMENTS PILOTS

9. NEW LEADERSHIP CHAIRMAN – Graham Westgarth Teekay Shipping (Canada) VICE CHAIRMEN – DavidKoo, Valles Shipping (Hong Kong) Bengt Hermelin, SAMCO (Singapore) Robert Johnston, OSG (USA) FOUR NEW EXECUTIVE COMMITTEE MEMBERS, including Carlos Juan Madinabeitia, Tradewinds (Venezuela)

10. ORGANIZATION REVIEW Operational • Clarify priorities • Narrow scope • Reduce administrative burden • Improve communications • Reduce number of meetings • Subcommittees are of value, but there are too many Structural • Executive Committee role vs Council role is unclear • Structure is heavy • Regional panel role is unclear

11. ORGANIZATION REVIEW Council • Discusses and approves the key issues, policies and priorities of INTERTANKO for the following year • Elects the Executive Committee • Approves the membership fees for the following year • Approves the accounts and auditor’s report Executive Committee • Implements the strategy and priorities of INTERTANKO, as directed by the Council, and the direction of the secretariat • Establish working group to review priorities and scope of activities

12. ORGANIZATION REVIEW Regional panels • Panel Chairman a member of the Executive Committee • Panel Chairmen, in conjunction with the regional membership, to decide the appropriate arrangements and frequency of meetings for maximum effectiveness Committees • Decide frequency of meetings based upon workload Secretariat • Develop improved communications through web site and other available means • Reduce administrative workload

13. World GDP and oil demand change % Oil/tanker demand correlates with Economic growth Positive growth projected – but there is still uncertainty Source. IMF/BP/IEA/Fearnleys

14. Tanker deliveries, removal, phase out m dwt Year Growth in tanker fleet since 2000The fleet will continue to grow even if all SH tankers are phased out(Delays in deliveries must be anticipated)

15. Tanker fleet development(Assumed max phase out, orderbook March 2009, include chemical tankers) m dwt number Tanker fleet increase 2003-2012: 70%

16. Seaborne crude oil tradeVolume back to the 1970s level bn tonne-miles Source: INTERTANKO, Fearnleys

17. Oil demand, tonne-mile, tanker fleet indices Tanker fleet increase 2002-2010: 46% Source: IEA, Fearnleys, INTERTANKO

18. Tankers used for floating storage Number 17 61 12 42 Tankers tied up in storage has saved the market and may be major wild card in 2010 Source: EA Gibson

19. Chinese oil import mbd China will be the most important market for tankers

20. CRIMINALIZATION • Criminalization of seafarers - “Prestige”- Spain - “Hebei Spirit” (South Korea) - “Tosa” case (NYK VLCC – Taiwan) - “Full City” (COSCO Bulk carrier – Southern Norway) • Industry-wide support for adherence to the IMO-ILO Guidelines on the Fair Treatment of Seafarers in the event of a Maritime Accident • Council agreed that INTERTANKO - needs a strategy on the issue of criminalisation of seafarers as a base for its future work - develop a position paper for use in discussion with governments and others based on factual examples

21. FACILITATION PAYMENTS • Facilitation Payments are frequently made to Authorities, Pilots, Terminal Officials, Inspectors, and more for “smooth” trade • However, Shipowners are expected to warrant that no bribes (and in some cases also no facilitation payments) will be paid during the performance of the contract and that owners are obliged to indemnify charterers from all consequences if any such payments are made.

22. FACILITATION PAYMENTS • Raise the issue with OCIMF, Round Table partners and Governments, as applicable • Members are encouraged to report incidents to INTERTANKO • INTERTANKO Documentation Committee is developing model clauses, e.g. for Voyage Charters: ….. any waiting time caused by the owners refusal to pay a facilitation payment or bribe shall count as laytime or if on demurrage time on demurrage, even if the vessel formally lacks any local certificates, clearances or there are any other  … circumstances or formalities that ordinarily could prevent laytime from starting, if the reason the owners do not have such approval etc. is because owner has refused a facilitation payment or bribe.

23. PILOTS • Discussion Group meetings with the leadership of the International Maritime Pilots Association (IMPA) and the American Pilots Association (APA) • Aim is to improve maritime safety and to explore areas for future cooperation with pilot groups • Issues have included bridge resource management, criminalisation of seafarers, maritime casualties, engine failures and pilot safety when embarking • Meetings have been very successful in gaining trust • IMPA/APA President proposed joint signing of Memorandum of Agreements (MOAs) to formalize relationship • Council has authorized Chairman to sign MOAs

24. EXCOM ISSUES GREENHOUSE GAS EMISSIONS PIRACY US POLICY ISSUES EU ISSUES WORKPLAN PRIORITY REVIEW CHINESE MARINE POLLUTION REGS CONDITIONS OF CLASS MERCURY IN CRUDE OILS IMO YEAR OF THE SEAFARER FDIP

25. FDIP Freight and Demurrage Information Pool • Helps members with demurrage and other claims against charterers which are not dealt with on a timely basis • On average, takes only 30 days from reporting a claim to the FDIP before payment is received • Last year the FDIP assisted in the settlement of claims totalling over USD 5 million • Annual fee is USD 1440 for entire fleet no matter how many claims are chased • For further information contact Michele White (michele.white@intertanko.com)

26. US ISSUES • Massachusetts lawsuit • EPA Vessel General Permit • California Air Resources Board (CARB) air emission • Emission Control Area • Sanctions

27. MASS LAWSUIT INTERTANKO CONCERNS • District Court 2006 decision upholds Coast Guard authority over vessel operations in US waters • Reinforces unanimous US Supreme Court decision in 2000 when INTERTANKO took the state of Washington to court

28. MASS LAWSUIT DEVELOPMENTS • In July the District Court Magistrate Judge issued his recommendation to the District Court to grant the U.S. Government's motion for a permanent injunction enjoining the State of Massachusetts from enforcing the tug escort and vessel manning provisions of the states oil spill prevention regulations. • The State of Massachusetts has objected to this recommendation • We await the District Court’s decision

29. MASS LAWSUIT NEW DEVELOPMENT • New Mass law imposes triple the fines if an oil spill occurs and tank vessel did not provide the state with advance notice, have a tug escort and have a state pilot on board (USD750K per day) • State trying to indirectly regulate tank vessel operations in Buzzard's Bay, which is contrary to the Supreme Court decision in state of Washington • USCG sent a letter expressing deep concern about the new law, but extremely unlikely they will take the lead in taking Massachusetts to court political reasons. • If successful, will very likely be used by other states, including Washington, as a vehicle to get around the state pre-emption

30. EPA VGP INTERTANKO CONCERNS • Federal Court orders EPA to develop regulations for all ship discharges under NPDES permit system of Clean Water Act • Judge acknowledges that US Coast Guard has authority under certain laws, but believes that Congress also gave authority to EPA under Clean Water Act • Ruling has two federal agencies responsible for same subject matter

31. EPA VGP DEVELOPMENTS • VGP requirements have been effective since February 2009. • Environmental groups have sued EPA stating that the VGP discharge requirements, in particular those relating to ballast water, are not stringent enough. • Lake Carriers Association, American Waterways Operators and World Shipping Council have sued EPA requesting the court to vacate the VGP • Consideration extended until Feb 2010 • Expected outcome is that court will maintain in place the existing VGP, while remanding the VGP back to EPA for reconsideration.

32. CARB AIR EMISSIONS INTERTANKO CONCERNS • CARB implements unilateral requirements that are not consistent with IMO standards • Fuel switching to low sulphur fuels could have safety implications

33. CARB AIR EMISSIONS DEVELOPMENTS • June 2009 US District Court denies PMSA motion to dismiss CARB air emission regulations for ocean-going vessels • Court also ruled that California has the authority to apply the regulations 24 miles from their coast because they only applied to ships entering Californian ports • PMSA to take matter to US Appellate Court • In August San Francisco Harbor Safety Committee meeting discusses engine failures in San Francisco Bay as a result of fuel switching to comply with this CARB regulation. CARB representative at the meeting made it very clear that suspending the CARB regulation is not an option.

34. NORTH AMERICAN ECA 200 nm 200 nm

35. NORTH AMERICAN ECA • Proposal submitted by Canada and USA to IMO MEPC 59 meeting July 2009 • Approved for circulation for adoption • Expected to be adopted at MEPC 60 (March 2010) • Expected to enter into force Aug 2012 • When in force: • Sulphur content 1.0% or less • Sulphur content 0.1% or less after 1 Jan 2015

36. SANCTIONS • Iranian sanctions - Both houses of US Congress have passed bills - Pertain to someone who provides ships to deliver refined petroleum products to Iran - INTERTANKO developing charter party clause • Ban on paying ransom to pirates - US considering amendment to UN resolution 1844 which would ban payment of ransom to Somalia pirates - Also considering possible Executive Order - If either enacted, could impact ships calling in US or companies operating such ships

37. THANK YOU!! WWW.INTERTANKO.COM